Stocks Rebound but Fear Remains; Citi Gains

Stocks bounced back Friday after a two-day selloff that saw major indexes crash through support levels and shaved 872 points off the Dow.

But, market pros were, with good reason, skeptical.

"At best we might see a day or two of further rebounds, but as we've seen in the past after a big rally it always comes off, it's always met with skepticism," Omer Bhatti, head sales trader at Worldspreads, told CNBC.

"People are being spooked out of positions instead of thinking rationally," he added.

All of the major indexes suffered massive selling in the previous session and closed at multi-year lows across the board. A lack of direction on the proposed auto bailout and TARP plan continued to add to investors' fear.

Yet the massive drop Thursday which saw bond prices post their biggest gains ever, triggered another round of speculation as to whether the market had found a bottom.

Such a bottom would be expected to trigger a violent rally.

"Add a gigantic short-covering rally and it could be a rally the likes that we've never seen before," Matt Zeman of LaSallle Futures told CNBC.

Citigroup shares jumped 10 percent, trading above $5 a share, after falling nearly 50 percent in the prior two sessions.CEO Vikram Pandit, aiming to swat down rumors that the company may be sold off in pieces, said the firm would not sell its Smith Barney brokerage unit.

Most financials were higher Friday but JPMorgan shares fell more than 5 percent.

General Motors and Ford also advanced, even as the Big Three CEOs were sent back to Detroit on their private jets without a bailout as Congress agreed to revisit the issue in December.

Shares of Dell Computer rose after the computer maker reported its earnings fell but beat expectations as cost-cutting measures and a rise in consumer sales helped offset weakness in corporate sales.

In the latest sign of how tough it is for retailers, AnnTaylorposted a lossas same-store sales tumbled 20 percent. The women's apparel chain also declined to offer an outlook for the crucial holiday-season quarter but said that margins would be under pressure in this highly promotional season.

Numerous Federal Reserve representatives will take to the stage with Philadelphia Fed President Charles Plosser speaking at midday in Philadelphia and Chicago Fed President Charles Evans at 12:40 pm in Indianapolis.